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Labor Ruling in California Means Big Changes for Uber's Business Model

A California labor commissioner has resolved a long-standing dispute over the employment status of Uber drivers. Uber and other transportation network companies will have to adjust.
June 17, 2015, 1pm PDT | James Brasuell | @CasualBrasuell
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"California’s labor commissioner said a driver who connects with customers through the Uber Technologies Inc. app must be considered an employee," report Andrew Dunn, Eric Newcomer, and James Nash. The ruling, "strikes at the heart of its business model," according to the article.

To provide some context, "San Francisco-based Uber, like other 'sharing economy' startups, has built a business around a flexible car fleet piloted by people it contends are independent contractors." Although Uber is expected to appeal the decision, "[i]f upheld, the decision might require the company to provide health insurance and guarantee a minimum wage -- neither of which is required for contractors."

Uber made news on a related theme in April when it became one of the largest employers in the Bay Area. At the time, those employment figures came with the caveat that Uber did not consider their drivers to be employees of the company.

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Published on Wednesday, June 17, 2015 in Bloomberg Business
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